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Saturday, November 19, 2016

Strangling us at the waist

More than 20 years ago in Havana a friend and colleague of mine
portrayed the regime's incessant calls for austerity with an
unforgettable image that I have never forgotten: "Boy, if we keep
tightening our belts they're going to strangle us at the waist."

And that is what the Castro brothers are calling for, once again,
according to the unbelievable latest report put out by the National
Bureau of Statistics and Information (ONEI) a few days ago.

And I say unbelievable because as the year winds to an end the entity
has come out and claimed that in 2015 the "trade surplus" of Cuba fell
by 1.6 billion dollars, Cuban exports of goods and services decreased by
2.9 billion, and imports, 1.3 billion, due to the low commodity prices
and the crisis in Venezuela.

This delay in disclosure was politically motivated. The trade balance
will soon be announced for 2016, and it will be worse. And the
Government will want to claim that if in 2015 the fall in imports was
sharp, this year of course there was less money to import goods and
food. Then in 2017 things will be even worse, and we will have to
tighten our belts, again.

With a straight face, ONEI officials went even further and reported that
in 2015 the export of goods and services reached 14.9 billion USD, and
imports totaled 12.6 billion.

This is completely false. All these statistics have been bloated with
smoke-and-mirror accounting tricks. To start with, at no time since
1961, when Fidel Castro proclaimed the Communist nature of "his"
revolution, has Cuba had a surplus in its trade balance, except for an
almost symbolic surplus of 10 million dollars in 1974. That is, over the
course of 54 years of self-declared Communism, Cuba has posted 53
international trade deficits, and 1 micro-surplus.

Neither has the Island ever exported goods and services worth more than
5.4 billion USD. Castro's record exports came in 1989 with 5.399
billion, but in that same year imports were also at a record high of
8.14 billion dollars, and Cuban foreign trade showed a huge deficit:
2.74 billion.

It was, precisely, trade deficits that were responsible for Cuba's
enormous foreign debt, which hit 59.681 billion dollars in 2013, for per
capita debt of 5,328 USD, the highest in the Third World. This was,
basically, due to trade credits received and never paid by Havana.
Thanks to Obama's policy towards Cuba, lately several creditor countries
have forgiven many of the debts owed by the Castros, who will get away
without paying a penny of those debts, now renegotiated.

The economy does not grow

Cuba, of course, does not always need to post a surplus in its trade
balance. It is normal for developing countries to run trade deficits, as
they need to import technology, capital goods, raw materials, and
equipment, for which they receive loans that they pay back with their
economic growth itself.

But in a centrally-planned economy, imported technological and capital
resources are not taken advantage of, as there is waste, bureaucratic
negligence, errant decisions, massive theft at factories, very low
productivity and widespread general labor inefficiency, to the point
that workers are now imported from India.

Thus, the economy does not grow and loans are not paid back. Thus,
suppliers stop selling, and funding sources stop lending money. Today
Cuba exports fewer goods than it did in the mid-20th century,
concentrated in four basic products: nickel, sugar, tobacco, rum and
pharmaceutical products (16% of the total).

How, then, can the Castro regime report that it had a trade surplus in
2015, and exported goods and services worth nearly 15 billion dollars?

It´s simple. For years the Castros have had thousands of doctors and
technicians of all kinds (including generals, colonels, and intelligence
and counterintelligence officers) in Venezuela. Due to his verbal
incontinence, Chávez himself actually admitted that he had 44,000 Cuban
doctors and nurses in the country. There are another 11,400 Cuban
doctors in Brazil, and there are even more in some 64 other countries.

Income confiscated, not produced

The Castro dictatorship confiscates 75% of the wages of those thousands
of doctors and technicians, a maneuver unprecedented in modern history.
This stolen money, as if they were slaves owned by State's military
regime, is then entered in the books as it were from exported services,
exceeding some 11 billion dollars a year on average.

But that money obtained from Cuban doctors abroad does not really belong
to the Castro government, but to those personnel, who work and receive a
salary in foreign territories, not on the Island. No such income is
received by the regime, but rather has been unfairly expropriated.
Reporting this as it were from exported services is a farce.

And there are more accounting ruses. Castro re-exports part of the
petroleum given Cuba by Venezuela, which, until a year ago, was at least
36 million barrels of oil a year. That is, Cuba exports a resource that
was not produced in the country, that did not cost it a penny, and does
not appear in its Gross Domestic Product (GDP). However, it obtains with
this non-produced good currency that boosts the supposed "surplus" in
its trade balance.

Those in the upper echelons of the Castro regime have no qualms about
reducing the already scarce supply of oil and gasoline in the country
and exporting it to obtain currency, most of which ends up in the
coffers of the civil/military nomenklatura rather than the nation's
public treasury.

To make matters worse, the Government inflates the GDP figure
inordinately. It has done so since 1959, following orders issued by Che
Guevara when he was president of the National Bank. But now its methods
are even more "profitable."

Fewer exports than 60 years ago.

First, social spending, like that on Public Health and Education, is
plowed into the GDP, as if collected by private institutions at high
prices in a developed capitalist country. That is, fictitious values
​​of services, rendered free, are calculated as if they had generated
revenue for private institutions. No other Government in the world lies
in this way. If Latin American countries did the same thing, the poorest
nations would suddenly seem rich.

Actual Cuban exports in 2015 were goods in the amount of 3.9 billion
dollars, as reported by the ONEI itself in early 2016. That's less than
half of the $9.898 billion exported by the Dominican Republic, a much
smaller country, whose GDP was seven times lower than Cuba's before the
Castro regime. In 2016 Cuba will have exported fewer goods, and in 2017
the number could be even lower. And it will no longer be able to tighten
its belt, as my friend said.

The truth is that Cuba now exports fewer goods than it did about 60
years ago, when, in addition to the aforementioned products, it sold
meat, coffee, pineapple, stud bulls, fruit and other agricultural
products making Cuba a significant food exporter. Today it imports 81%
of the food it consumes.

In short, Raúl and Fidel Castro's regime is unique in its mockery of the
international community, the UN, the ECLAC, the UNDP and every other
international economic organization.

The appalling thing is that no one condemns these fraudulent statistics.
Everyone accepts them, which enables the Castros to remain the great
mythomaniacs and creators of fallacies that they are, as they pull the
wool over everyone's eyes while almost suffocating everyday Cubans ...
who cannot tighten their belts any further.